Market Overview

Ever since the rally out of the March 2009 low began, I have maintained that
it has been a bear market rally. All the while, the politicians think that
their printing spree, bailout plans and stimulus packages have put a bottom
in the economy. I continue to hear the talking heads on "CNBS" cheering on
the public and in their eyes all they can see is the so-called "double dip" recession.
I'm sorry folks, but this is not a double dip recession. According to my analysis
we have entered a global debt crisis in association with K-wave winter. Besides
the purging of debt from the system, a by-product of K-wave winter is that
we have also entered global bear markets in stocks and commodities. Based on
my analysis, the rallies that began in early 2009 have not been associated
with a recovery, but rather a reprieve of the ongoing deflationary forces of
K-wave winter.

In accordance with Dow theory, bull and bear markets are divided into three
phases with each of these phases separated by important counter-trend moves.
The counter-trend moves separating these phases are very deceiving because
people perceive them as being a resumption of the previously established longer
term move rather than a counter-trend move within the newly established trend.

In the current case, most people perceive the 2009 low as THE bottom and the
advance that has followed the March 2009 low as being a resumption of the advance
that carried the markets into the 2007 highs. Based on the ongoing evidence
associated with my analysis, this is not true. According to my analysis, 2007
marked the top of the 33 year longer-term bull market that ran between 1974
and 2007. Also according to my research the rally that has followed the 2009
low has been the deceitful counter-trend move that will ultimately prove to
separate Phase I from Phase II of the much longer-term secular bear market.
Historically, Phase II declines are the most devastating and I see no evidence
that this time will be any different. I have discovered a very specific "DNA
Marker" that has been associated with every major stock market top since the
inception of the Dow Jones Industrial Average in 1896. I am covering the developments
surrounding this DNA Marker at Cycles News & Views. When all of the pieces
of this DNA Marker are in place, the market will be at great risk of the resumption
of the ongoing secular bear market and the decline into the Phase II low. Virtually
no one, understands the destruction that will follow in the wake of the Phase
II decline. It is the reckoning of the seriousness of the situation associated
with Phase II declines that make them so devastating.

As was seen during the Phase I decline, everyone will again turn to the government
to "fix" the problem. Funny thing is, the government was instrumental in causing
the problem in the first place. Furthermore, the appearance that the government
created the bottom in 2009 is an illusion. The government does not know any
more about fixing the economy than they do about fixing the oil leak in the
Gulf. All the government can do is spend more money and create more red tape.
The best thing that could happen would be for the government to stand back
and let the free markets do what they will eventually do anyway. Based on the
historical relationships between long-term secular bull and bear markets, the
bear markets tend to run about one third the duration of the preceding bull
market. Thus, with us less than 3 years from the 2007 high, this secular bear
market has much further to run. Based on the historical relationships a bottom
is not likely due until late in the current decade. For more on historical
bull and bear market relationships please refer to www.cyclesman.info/1966to74comparison.htm

Below I have included the current chart of the Industrials and the Transports.
From a Dow theory perspective, the bullish primary trend change associated
with the bear market rally still remains intact.

According to Dow theory, confirmation of a primary trend change requires a
joint move above or below a previous secondary high or low point. This has
not yet occurred. But, when it does and if the DNA Marker that I have identified
at every major top since 1896 is also confirmed, then at that time the DNA
Marker will serve to validate Dow theory. This will in turn then put the market
at great risk of a far more devastating decline than most anyone anticipates.
The bottom line is that the Phase II decline is lurking and there is analysis
and there are tools to help understand how the setup is unfolding. Just as
I warned about the decline into 2002, the extended 4-year cycle into the 2007
top and even the 2008 top in commodities, few listened but later wished they
had. You have been warned!

I have begun doing free market commentary that is available at www.cyclesman.info/Articles.htm The
specifics on Dow theory, my statistics, model expectations, and timing are
available through a subscription to Cycles News & Views and the short-term
updates. I have gone back to the inception of the Dow Jones Industrial Average
in 1896 and identified the common traits associated with all major market
tops. Thus, I know with a high degree of probability what this bear market
rally top will look like and how to identify it. These details are covered
in the monthly research letters as it unfolds. I also provide important turn
point analysis using the unique Cycle Turn Indicator on the stock market, the
dollar, bonds, gold, silver, oil, gasoline, the XAU and more. A subscription
includes access to the monthly issues of Cycles News & Views covering the
Dow theory, and very detailed statistical based analysis plus updates 3 times
a week.